PRIVATE INTO PUBLIC COMPANY

The time of the incorporation of a business entity, the applicants are provided with options for selecting their class for Company based on which the Companies Act, 2013 provisions will be applied. To avail the benefits of the other classes, the Companies Act, 2013 allows changing the class post-incorporation from Private Company to Public Company and vice versa. In simple words, Private Company is a closely held Company which put a restriction on transfer of shares through its Articles of Association (AoA). The Companies Act, 2013, prohibits the invitation to the public to subscribe for shares in a Private Company. On the other hand, Public Company does not have any such restrictions regarding an invitation to the public for the subscription of shares or transferability of shares. Both companies have their benefits and limitations. The applicants sometimes desire to change their class of Company. The procedure followed for the Conversion of Private Company to Public Company will be discussed here. The article discusses the relevant provisions of Companies Act, 2013, for Conversion of Private Company to Public Company.


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FOR CONVERSION, THE PRIVATE COMPANY IS REQUIRED TO TAKE THE FOLLOWING PROCEDURAL STEPS

Step 1 : Convene a Board meeting

1. for approving proposal for conversion of the company into a public company.
2. for fixing time, date and venue for holding a general meeting of the company for passing the required special resolution through postal ballot for conversion of the company into a public company.
3. for approving notice for the general meeting along with the explanatory statement as required.

Step 2. Convene a General Meeting

Hold the general meeting and have the aforementioned special resolutions passed for conversion of the company into a public company.

Step 3. Filing of Form MGT-14

Filing of Form MGT-14 Copy of Special Resolutions along with explanatory statements to be filed within thirty days with the Registrar in Form MGT – 14.

Step 4. Numbers of Member Increased

Increase the number of members to minimum seven to comply with requirements of section 3 of the Companies act 2013.

Step 5. Numbers of Director Increased

Increase the number of director to three to comply the requirements of the Section 149 of the companies act 2013.

Step 6. Filing of order of CG

A copy of order of the CG approving the alteration shall be filed with the Registrar in Form INC – 27 with fee together with the printed copy of the altered articles within fifteen days of the receipt of the order from the CG.

Step 7. Certificate of Incorporation

Obtain from the ROC, fresh COI consequent upon conversion of a Pvt company into Public company

Step 8. Printing of MOA and AOA

Have fresh copies of the altered memorandum and articles of association printed, incorporating the changes or effect changes in all copies of the memorandum and articles of association lying in the office of the company, and in letter heads, invoice forms, receipt forms, all other stationery items, and at every other place where the name of the company appears.

Step 9. Notice in Newspaper

Issue, if necessary, a general notice in newspapers informing members and all other concerned persons and public at large that the company has become a public company and its name has been changed
from............... Pvt. Ltd.
To ................ Limited
with effect from ...............

Step 10. Inform the Authorities

Inform all concerned persons/authorities about the conversion of the company from private company to public company.

Step 11. Common Seal

If a company opts to have a common seal, arrange for a new Common Seal and have the same adopted at a meeting of the Board of directors of the company and keep both the old and the new Common Seals in safe custody under lock and key.

Step 12. Printing

To have stationery printed with the new name and/or affix rubber stamp of the new name on all the existing stationery items including the share certificates blanks.

Step 13. Painted the New Name

Have painted the new name of the Company on all the sign boards wherever they are displayed

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